The cheque arrives with a note: what was it given for?
A cheque for £250 comes in the post with a short letter. It says the money is in memory of a member who died in the spring, and that it should go towards the new roof, or the youth room, or the minibus. Another family puts a collecting tin on the table at the funeral and leaves a card that says "for the children's garden". Nobody has told you what to do with it, and the next committee meeting is six weeks away.
If you are the treasurer, this is the moment that matters. The money is in the bank, and the cash book will show it as income on the day it lands. What the note says decides whether that money can be spent on anything the charity chooses, or only on the purpose the donor had in mind. Get that wrong and you may find, a year later, that a fund has been spent on the wrong thing and nobody can say why.
Deciding whether it is restricted and recording the wishes in writing
A restricted gift is one given for a particular purpose. An unrestricted gift is one the charity can use for its general work. Many memorial gifts fall in between. A note that says "in memory of Jean" with no purpose is usually unrestricted, though the trustees should still decide how to honour the spirit of it. A note that names the roof or the garden is a clearer request.
Whether the charity can accept a gift for a purpose at all depends on its governing document and its objects. Trustees make that decision, not the treasurer on their own. If the purpose falls outside the charity's objects, the trustees may need to contact the donor or family, or use the gift in a different way that the donor agrees to. Check the Charity Commission, OSCR or CCNI guidance for your organisation, and take advice if the wording is unclear. This is general information, not legal advice.
Whatever the trustees decide, write it down the same week. Keep the original letter or card, scan it, and note the date received, the amount, the donor's name and address if you have them, and the wording used. Add a line that records the trustees' decision and the minute reference. If the gift is restricted, set up a restricted fund in the cash book and tag the receipt to it. Do not let it sit in general income with a note in the margin. The next treasurer will not read the margin.
A simple spreadsheet can do this, but it needs a fund column and a rule that every restricted receipt goes in that column. The moment you have two or three funds running, that rule is what keeps the figures honest.
Gift Aid questions: when a gift can and cannot be claimed
This is where small charities often lose money without noticing. Gift Aid adds 25p to every eligible £1 donated by a UK taxpayer, provided the donor has made a valid declaration and the charity meets the conditions. The rate is HMRC's basic-rate relief at the time of writing, so check live guidance before you rely on it.
For memorial giving, the common case is a donor who gives in person, perhaps at a service or by cheque, and who has signed a Gift Aid declaration. If the declaration is valid and the donation is eligible, you can claim on it. As a worked example only: £300 of eligible donations from UK taxpayers with valid declarations would mean £75 of Gift Aid at 25p in the pound. That is arithmetic, not a forecast for your charity.
A gift from a collecting tin is different. Cash from a tin has no individual declaration. The Gift Aid Small Donations Scheme (GASDS) can top up some qualifying small cash donations without declarations, but it is subject to HMRC rules and caps, and not all tin money qualifies. Do not assume it always does.
Legacies are different again. A gift left in a will is generally not claimed as Gift Aid in the way a donor's declaration works, so do not add a 25p top-up to a probate receipt without checking HMRC's Gift Aid guidance first. Keep the estate paperwork separate from the Gift Aid records so the two do not get mixed up at year end.
This section is general information, not tax advice. Gift Aid and GASDS rules change, and the detail matters. Check current HMRC guidance for declarations, records and claims before you submit anything.
If you want a rough sense of how much Gift Aid might be sitting in your donation records, the Estimate your Gift Aid gap calculator is free and needs no account. It gives a planning estimate, not a claim, but it can show whether the memorial gifts you have recorded include declarations worth following up.
Reporting the fund to trustees
Trustees need to see restricted funds on their own line. At each meeting, or at least at each quarter end, the treasurer should report the opening balance, money received, money spent against the purpose, and the closing balance. The committee should be able to answer, without asking you, how much is still available for the roof and whether any of it is committed to a contractor.
Keep the report short. A one-page table is usually enough. Note any gifts received since the last meeting, the trustees' decision on each, and any restrictions that have been met. If a restricted fund has been fully spent, say so and record the date, so it does not appear as a live balance a year later.
At the annual general meeting, the figures should match the income and expenditure accounts and the restricted balances in the year-end figures. If they do not, find out why before the examiner does. Vasker's year-end tools produce income and expenditure with a prior-year comparison, which helps when a memorial fund has built up over two or three years. Whatever software you use, the trustees' minutes and your cash book should tell the same story.
Keeping the paper trail for the next treasurer
You will not be the treasurer forever. The next person may inherit a shoebox of letters, a tin of loose cash and a restricted fund nobody can explain. Plan for that now.
For each memorial or legacy gift, keep together: the original letter or card, the receipt you issued, the cash book entry, the trustees' minute recording the decision, any Gift Aid declaration, and the bank statement line. A single folder per fund, with an index sheet at the front, is enough for most small charities.
HMRC expects Gift Aid records to be kept for at least six years. Keep the wider records for as long as your charity's own policy and the Charity Commission, OSCR or CCNI guidance require. Write the retention rule into the handover note.
Finally, thank the donor. A short letter that names the fund, says what the money will do, and confirms the amount is usually all that is needed. If the gift was restricted, say that the trustees have agreed to use it for the stated purpose. That letter becomes part of the record, and it tells the family that the wish was heard. It is also the document the next treasurer will be glad to find.